Business Context and Reporting Period
This Form 8-K Current Report was filed by Brooks Automation, Inc. on October 4, 2017 (reporting date), with the signature date of October 10, 2017. The filing discloses the entry into a material definitive agreement to secure financing and the completion of an acquisition. Note: The request metadata lists "Azenta, Inc.," but the filing text explicitly identifies the registrant as Brooks Automation, Inc.
Key Financial Metrics and Agreements
- Debt Financing: Entered into a seven-year, $200 million secured term loan credit facility maturing on October 4, 2024.
- Acquisition Cost: Paid approximately £52 million in cash consideration to acquire 4titude Limited.
- Interest Rates:
- Eurodollar Borrowings: Adjusted LIBO Rate + 2.5% margin.
- Alternate Base Rate (ABR) Borrowings: Alternate Base Rate + 1.5% margin.
- Repayment Terms: Quarterly principal installments of 0.25% of the initial principal amount, with the remainder due at maturity.
- Liquidity and Collateral: The facility is secured by a first-priority lien on substantially all assets of the Company and its subsidiary BioStorage Technologies, Inc., excluding accounts receivable and inventory (which remain under the existing ABL facility).
Material Changes and Transactions
- Acquisition of 4titude Limited: On October 5, 2017, Brooks Automation completed the acquisition of 4titude Limited, a U.K.-based provider of consumables and bench top instruments for the life sciences industry. The purchase price is subject to working capital adjustments.
- Financing Structure: The new Term Loan Credit Facility was established to fund fees, working capital, and acquisitions. It includes an accordion feature allowing an increase of up to $75 million plus voluntary repayments, subject to a secured leverage ratio of less than 3.00 to 1.00.
- Amendment to Existing Credit: The Company amended its existing asset-based revolving line of credit (Existing ABL Facility) to harmonize terms with the new Term Loan and to subordinate the ABL liens to the new Term Loan on most assets.
Guidance, Risks, and Covenants
- Covenants: The Term Loan Agreement contains no financial maintenance covenants. However, it includes negative covenants limiting additional indebtedness, liens, asset sales, and acquisitions (unless consideration is less than the greater of $175 million or 20% of consolidated total assets).
- Prepayment: The Company may prepay the loan in whole or in part without premium or penalty. Mandatory prepayments are required upon disposition of collateral or if excess cash flow exists.
- Risks and Contingencies: Events of default include cross-defaults with other material debt, including the Existing ABL Facility. The acquisition price is contingent on final working capital determinations.
- Financial Statements: Pro forma financial information and financial statements of the acquired business are not included in this filing but will be filed by amendment within 71 calendar days.
Investor Verification Checklist
- Verify the final purchase price of 4titude Limited after working capital adjustments.
- Review the upcoming 10-K filing for the full text of the Term Loan Credit Agreement and the Sale and Purchase Agreement.
- Monitor the Company's leverage ratio to ensure compliance with the 3.00 to 1.00 threshold for potential facility increases.
- Confirm the integration progress of 4titude Limited into Brooks Automation's life sciences portfolio.
- Check for any subsequent amendments to the Existing ABL Facility regarding the subordination of liens.